Apple’s stock price falls to lowest point in six months

While short-term challenges remain, analysts are bullish on Apple's long-term.

On Friday Apple’s stock price closed at $527.68 per share, the lowest it’s been in six months. Since September, the company has lost about 25 percent of its value from its peak of $702 per share. So what’s gone wrong?

"I think it’s the perfect storm for Apple," Van Baker, an analyst with Gartner Research, told Ars. "There’s a combination of a lot of things, and add to that, people are starting to think that Apple won't bring out something that’s truly innovative every few years."

Warning: contents under pressure

As we reported last month, despite the 26 percent year-over-year growth for iPads, many investors were disappointed that Apple wasn’t able to blow through Wall Street’s estimates as it has done in previous quarters.

"Going into earnings we were wondering if the slowing economy will catch up with Wall Street and it has," said Channing Smith, co-manager of the Capital Advisors Growth Fund, told Reuters last month.

"It’s not that they fell short of the guidance, but they didn’t hit what Wall Street said they would hit," Gartner's Baker, added. "That’s the first time in a long time they haven’t done that."

Other analysts have said that the management changes certainly haven’t inspired confidence among investors either. Within the last two weeks, Apple gave the boot to iOS Software head Scott Forstall and its retail head John Browett. Forstall’s departure was reportedly celebrated by many among Apple’s rank-and-file—he also clashed with Jony Ive, Apple’s legendary creative genius.

"It demonstrates volatility, you had two major people in the organization departing," Rhoda Alexander, the lead analyst for tablets at IHS iSuppli, told Ars. "You have organizational changes, [and that breeds] uncertainty with the market."

Supply chain bottlenecks?

When iOS 6 debuted in September 2012, we noted at the time that Apple’s own Maps app didn’t quite deliver—our own Jacqui Cheng lamented the removal of public transit features: "I have virtually no reason to use Maps otherwise in my daily life, which is why its sudden absence in iOS 6 is deeply disappointing."

CEO Tim Cook, of course, posted an uncharacteristic public apology in late September, going so far as to recommend other alternatives while Apple worked out the problems with its current version.

"Apple has demonstrated through the years that it is very tapped into what that experience is for the user," Alexander added.

Cook has also faced pressure from Hon Hai, the company that owns Foxconn, which assembles the iPhone and many other electronic devices—odd, considering Cook’s own professional experience in supply chain management.

A Hon Hai executive told the Wall Street Journal last month that the iPhone 5 was the "most difficult device that Foxconn has ever assembled."

"The thing that gives people some pause is the statement from Hon Hai that says: 'We can’t build as many iPhone 5s as we want to,'" Baker told Ars. "[Apple] should be able to sell a ton of iPhone 5s, but if they can’t get enough, [the company] may fall short."

Baker added that the final three months of 2012 may prove to be Apple’s best this year, as holiday shopping moves into full swing, but that these manufacturing delays could put a damper on that as well.

Apple's long game

Finally, one of Apple’s biggest problems has been increased competition against the iPad, not just from Android tablets, but from Amazon, and now Microsoft as well.

Since last year, a whole slew of new tablets have been released, and as the Pew Research Center showed in a recent study, Apple’s market share among tablets—while still large—has fallen to just above 50 percent.

"What we’re seeing from early data on the market is that the demand for the mini continues to be very strong—we’re expecting Q4 to be above 10 million units [sold]," Alexander, the IHS iSuppli analyst, added.

"If you looked at market two years ago you had a huge performance gap between also-rans and Apple. What you’ve seen in particular among Android products is that gap narrowing as you move out over time—a lot of these products are aggressively priced. It’s unrealistic to think that Apple will maintain absolute dominance that it once had, but do we anticipate Apple being the top dog? Absolutely."

Fundamentally though, the question remains: can CEO Tim Cook provide the type of consistent, innovative, groundbreaking leadership that Steve Jobs was known for? It’s only been about a year since Jobs’ passing, but certainly the pressure is mounting for Apple to maintain its creative edge.

We here at Ars have certainly tried to understand the huge shoes that Cook has to fill, as has anyone who continues to follow the company, whether from Wall Street, Main Street, or from the depths of a comments section. Baker, though, says that this is just a short-term blip for Apple.

"I’m not that concerned with Apple," he concluded. "I think Tim Cook is a very capable CEO. I have a heckuva lot of respect for Jony Ive, Phil Schiller, Eddy Cue and the team that is working on these products and services. I think Apple is going to be just fine. I think they’re going through some gyrations with the stock price right now. The one big question is: are they going to be able to bring a new and truly innovative thing to market? Apple’s business model relies on that."

The stock was substantially lower during the day. Basically once you no longer look invincable, the big mo is gone. The odd-lotters bolt.

What's next? Apple TV? It isn't like the market needs another streamer box. Well I suppose they can make the iphone thin enough to shave with. Then go super-retina where you need a microscope to see the dots. Wait, these ideas are so silly even fanbois won't drink that koolaid!

Thing is, with a P/E ratio of 11.95 it's a bargain right now. You have to wonder if there is a little stock manipulation going on.

It is, but I think Wall Street has looked at Apple as a growth stock and now that it is slowing Wall Street is reacting. Apple core business is still insanely good, its just blowing Wall Street's doors off. I think Wall Street is looking for another product line. Apple has cashed in big with the iPod, iPhone, Mac Air and iPad but now each of these lines are either defunct or facing significant pressure and can no longer enjoy a near first to market advantage. Where is the next "i" product to drive growth? Without a new product Apple faces pressure on their profitability as their competitors close in.

But the stock market as a whole has plummeted recently. That drop would be more substantial of the rest of the market wasn't dropping too.

I'm not worried about Apple's fate. I'm no Apple apologist--my Vaio Duo 11 convertible tablet and my Windows Phone smartphone and my Zune music subscription should clear that up right quick--but I simply don't see a company on the verge of disaster. People criticize them for not being innovative recently, but just three years ago, they made tablets a mainstream success--something MS had been trying to do without much success since 2002. The Windows 8 convertible tablet revolution probably never would have happened but for the iPad. Same with Siri. No, it wasn't the first voice control software, and yes, there's room for improvement--but Apple once again took a niche product and made it a massive mainstream success.

Due to my own subjective preferences, I don't see myself buying an Apple product anytime soon, but I wouldn't be averse to buying Apple stock if I was buying stock. I'm not worried about the company's fate at all.

Their forward P/E is 9, back out the $120 billion in cash and short term securities and the P/E falls to the low 8s. That's INSANE for a company that is still experiencing revenue growth, makes billions in profit every quarter, pays a dividend, demand for its products outstrips supply, and they haven't even begun to sell phones to the 600,000,000 subscribers of China Mobile, etc. Look, I'm not some fanboi but an investor and the stock's current valuation is crazy cheap. I'm not telling anyone to go out and buy shares, but those advocating Apple's doom are clueless.

The stock was substantially lower during the day. Basically once you no longer look invincable, the big mo is gone. The odd-lotters bolt.

What's next? Apple TV? It isn't like the market needs another streamer box. Well I suppose they can make the iphone thin enough to shave with. Then go super-retina where you need a microscope to see the dots. Wait, these ideas are so silly even fanbois won't drink that koolaid!

I enjoyed your comment. Reminds me of the "nobody needs an Apple phone" headlines from 2006, or the "nobody needs a big iPod touch" headlines from 2010 or even the "Apple retail will fail" headlines. Personally, I think it's too early to worry. Contrary to popular belief, Apple has never entered a new market every quarter. In fact, there was a six year gap between the iPod and iPhone. Apple has plenty of time to flesh out their iOS product line while they carefully contemplate their next move.

I never liked Jobs, but to give credit where credit is due... he was the one who changed the market with the iPod/phone/pad as well as Air.

What has Apple done recently? from iPhone 4 to 4S with the only real difference being "Siri" (that Apple picked up from another company) and now with the iPhone 4SS (also known as the iPhone 5 ) you get one extra row of icons, half an inch and a bit thinner phone? As for the iPad line release one that is just under 8 inches when the competition has had 7 inch "pads" for 2 years?

iOS looks and feels ancient with the same stuff for years, while Apple was enjoying its seat at the top of the mountain the others were fighting pretty hard and now you have Android as well as Win 8...

While my sisters teenage friends two years (and last year) back felt it was quite cool to to have an iphone, some of them dont anymore.

It really seems Steve took most of the magic he spoke about with him.

Just a matter of time before the stock dips below $500, and dont worry, I'll be back here to say "I called it".

It feels like they've made a number of missteps this year. First, their iMacs should have been refreshed in the spring. Then their new rMBPs aren't priced competitively. Then the maps fiasco. Then the management change up. I don't blame folks for pulling their money out.

This article has a pretty obvious error in the first sentence. It says on Friday Apple's stock closed at 527.68, the lowest in six months. Actually, it closed up for the day, as on Thursday it closed 525.62. The main image in the article also shows this... pretty hard to miss the massive green +2.06 (0.39%).

So yeah, there was a lower close at least once prior in the 6-month period... the day before.

Apple continues to do very well, they have a profit margin that makes everyone else flush and good volume to match. They've even got a good, trendy image and strong media support.

So, why the drop? The idea is, someone is going to "win" the mobile game. They are going to build a big enough ecosystem that no one can catch them. The more apps you build the more users you attract and lock-in, the more users you have the more developers you attract, especially when they're the paying type and you can see how that feeds itself. Eventually you go "critical" in the nuclear sense, aka. it becomes self sustaining. More apps, more users, more developers and so it feeds itself at the expense of everyone else. Once you hit that "criticality" point no one else can catch you and you own the market. Then you can essentially print money, meaning you don't really have to try anymore, no matter what third parties will ensure people pay a large markup to buy your hardware. Imagine Microsoft made every Windows computer and you'll see what I mean. The market's belief that Apple is going to hit that "criticality" point is declining and that is why the stock price is declining. They are not as convinced that Apple is going to become a money printer and it's price drops accordingly, despite its current strong performance.

The stock was substantially lower during the day. Basically once you no longer look invincable, the big mo is gone. The odd-lotters bolt.

What's next? Apple TV? It isn't like the market needs another streamer box. Well I suppose they can make the iphone thin enough to shave with. Then go super-retina where you need a microscope to see the dots. Wait, these ideas are so silly even fanbois won't drink that koolaid!

I enjoyed your comment. Reminds me of the "nobody needs an Apple phone" headlines from 2006, or the "nobody needs a big iPod touch" headlines from 2010 or even the "Apple retail will fail" headlines. Personally, I think it's too early to worry. Contrary to popular belief, Apple has never entered a new market every quarter. In fact, there was a six year gap between the iPod and iPhone. Apple has plenty of time to flesh out their iOS product line while they carefully contemplate their next move.

What people are afraid of though, is Tim Cook failing to come to the same kind of conclusions that Steve would have, after the same "contemplation". His record so far doesnt look good. He put the retail employees on commission, I dont think Steve would have done that, it ruins customer service. He released iPhone5 without proper maps, and didnt have to, again something that I dont think Steve would have done, it was too big a hit on the customer experience. Steve was a visionary and men like him dont come around that often. The chances of Tim being able to do what Steve did are minimal at best, impossible at worst. The thing is, until Tim Cook does something that proves himself, as in the next innovative device, product or service, then we dont know how he will actually perform. He might be able to manage the company from a business standpoint just fine. But, a well managed business, and a well managed business with a visionary at the helm, is the difference between a good company and a great company. Thats what people are unsure of just yet. Is Apple going to be a good computer company that makes good products, or is it going to be a great company that makes great products? We dont know but we are watching closely and every single move made by Tim is going to be scrutinized as they already have been. And, like I said, some of his decisions so far, havent been exactly stellar. Only time will tell though. For those wanting to invest, dont kid yourself, you ARE taking a risk. There is no such thing as a sure thing in the stock market and business in general. Those that do take the risk, could profit hugely. On the other hand, they might not make much at all. Or, they could lose money. It is this uncertainty that is driving the lower stock price, and the market in general. I agree with other posters that Apple will be just fine, but "just fine" is a few steps down from where they are right now.

This is just my opinion, but even though I may not like Apple's way of manipulating the market to get their consumers, I respect the fact that they have at least a simplistic way of things when it comes to their functionality of their phones and tablets. From little kids to grandparents, it doesn't take a rocket scientist to understand how their products work, and I'm a die hard Android fan saying this..The point is that even though Apple is doing good, they have reached their plateau, their leveling out, and they will do well for a while, but without Steve Jobs at the helm at Apple, I slowly see a downward trend of their company's dealing with Wall Street and their investors. If they don't act soon, it could be too late for them to repair any damage they have done so far. It's when you have divisions in a company that causes the most damage. I hope Cook understands this, cause if he doesn't it's gonna be a rough road ahead for him and his company.

Apple continues to do very well, they have a profit margin that makes everyone else flush and good volume to match. They've even got a good, trendy image and strong media support.

So, why the drop? The idea is, someone is going to "win" the mobile game. They are going to build a big enough ecosystem that no one can catch them. The more apps you build the more users you attract and lock-in, the more users you have the more developers you attract, especially when they're the paying type and you can see how that feeds itself. Eventually you go "critical" in the nuclear sense, aka. it becomes self sustaining. More apps, more users, more developers and so it feeds itself at the expense of everyone else. Once you hit that "criticality" point no one else can catch you and you own the market. Then you can essentially print money, meaning you don't really have to try anymore, no matter what third parties will ensure people pay a large markup to buy your hardware. Imagine Microsoft made every Windows computer and you'll see what I mean. The market's belief that Apple is going to hit that "criticality" point is declining and that is why the stock price is declining. They are not as convinced that Apple is going to become a money printer and it's price drops accordingly, despite its current strong performance.

Lol, only banks print money for free. And, what you are talking about, usually requires illegal maneuvering(antitrust) to get to that position. The only reason MS did it is because they bullied other players out, they did not get there fairly. Also, if your government is doing what it is supposed to and fostering competition, then they should be stopping any company from actually accomplishing what you describe.

And this is why Apple released a 4th gen iPad so soon. The iPad Mini was always coming. Obviously, putting it out then was a great way to sell a whole lotta iPad's to add to their next quarter's overall sales. But they also rely on those Apple diehards who will go out and buy each and every single iPad (or Apple anything) that is released.

And getting them to buy an iPad in March, then another one to replace that one in October is pretty damn impressive. Bonus: you just got them to buy an iPhone 5, a new Macbook Pro, and an iPad Mini, too. All in one quarter. Suddenly, their iPad percentage goes up and they reassure investors.

But this strategy can only work so long as you have new markets to enter and tablets smaller than 8" probably wouldn't be that big a deal. Lower prices might work, but Apple seems adverse to doing that as it'll lead to diminishing profits in the long run.

So yeah, this onetime strategy worked and will help pat Wall Street on the back for the time being. Next year at this time, it'll happen again, though. All signs are showing an overall slowing of the tablet market in general. Apple can only be immune to this for so long given they are the high end and the high end is by definition not as vast or deep as the mid-range and low-end is.

Apple being at the high end will suffer the least for any slowdown as the people buying Apple products are the ones who have money to throw away on such things, but as less of the 99%'ers buy tablets, you'll see Apple needing to diversify again.

That's to say nothing of the fact that Apple has begun to do what Jobs said NOT to do. They are spreading their product lines thinner, increasing the different products that serve the same markets. That's was the whole point of keeping it simple: iPad, iPod, iPhone, Mac. The more iPad types they throw out there, the more users spread out across the different products, and the fewer of each product they can make at a reduced rate.

Let's also not forget they poked Samsung in the eye and Samsung produced a great majority of the parts they used to get on the cheap to keep those iOS products so cheap and well made. Suddenly, they have to cobble together a lot of suppliers to match what Samsung did under one roof. Volume discounts begin to fade when you're dealing with more suppliers rather than one and reliability goes down as you have to coordinate more players to do the same thing.

In the end, Apple may have thrown the baby out with the bathwater, ignored what seems like wisdom by Jobs, and also used their last "Get out of Jail" free card by releasing iPad Mini as a way to get "free" iPad % increases for the short term. I think they're all out of cards to play now, though.

What people are afraid of though, is Tim Cook failing to come to the same kind of conclusions that Steve would have, after the same "contemplation". His record so far doesnt look good. He put the retail employees on commission, I dont think Steve would have done that, it ruins customer service. He released iPhone5 without proper maps, and didnt have to, again something that I dont think Steve would have done, it was too big a hit on the customer experience.

I agree that this kind of sentiment has damaged Apple's stock creating a buying opportunity. Fortunately for Apple stockholders, it's also completely invalid. The "stick it to Google no matter what" strategy was 100% Steve's idea and he most certainly would have carried it out by releasing maps in its current condition. He also was no Saint. Ping, Mobile Me, Mark Papermaster, and the G4 cube were just some of his mistakes, the last of which was so disastrous the company actually lost money for a couple quarters. Sooner or later the market will sober up and there will be a large upside correction.

I agree with Pubert that there's likely more than a little post-election selling going on here. Look, capital-gains tax rates are going to increase next year. Anyone who's bought and held Apple over the past several years has accumulated some nice profits; selling before the end of 2012 means paying a lower tax rate on those gains. A glance at the list of other tech stocks that pkirvan kindly supplied suggests this is a market-wide phenomenon. It'll be interesting to see where Apple's price goes in January. My money is on "up."

I never liked Jobs, but to give credit where credit is due... he was the one who changed the market with the iPod/phone/pad as well as Air.

What has Apple done recently? from iPhone 4 to 4S with the only real difference being "Siri" (that Apple picked up from another company) and now with the iPhone 4SS (also known as the iPhone 5 ) you get one extra row of icons, half an inch and a bit thinner phone? As for the iPad line release one that is just under 8 inches when the competition has had 7 inch "pads" for 2 years?

Could you please, please tell me where you got the ridiculous idea that Jobs released brand new products every year? Did you really think that the smaller iPods, bigger iMacs, and incremental OS X updates that Apple spend SIX YEARS releasing between 2001-2007 were all "revolutionary"? The selective memory stuff just blows my mind.

And as for the "Steve Jobs magic" you refer to, why don't you go read some archives and find out what really happened when he released the iPhone in 2007? He didn't 'fool' anyone, the initial reviews roundly criticized the device for lack of apps, no camera, high price, and numerous other flaws. Few of them recommended it and initial sales were so dreadful that Apple had to drop the price two months later and give a refund to early adopters. Yeah, that's far from the image of rabid fanboys that some people seem to remember. But then something happened- when people actually got their hands on it, they liked it and showed to their friends who liked it too. This is a pattern we have seen repeated endlessly with the iPad, iPad Mini, 4S, and iPhone 5- poorly received launch followed by great sales. This is how things actually were in Jobs' time and it's certainly how they are today.

Thing is, with a P/E ratio of 11.95 it's a bargain right now. You have to wonder if there is a little stock manipulation going on.

Not in the slightest.

It's the end of the fiscal year, so fund managers are unloading it because it returned value this year.

The only reason this is news at all is because it's being unloaded so hard and fast; the reason fund managers are dumping it is rather simple, though. Ma and Pa aren't buying it any more. Without individual investors feeding money into the company, it lacks long term prospects to remain profitable for fund managers, which means they clear out more and faster (so as to get the most possible value out of it).

The fear is, however, that Apple has saturated its likely investment pool. I actually haven't seen anyone bullish on Apple stock who isn't a fan and is actually a broker or fund manager.

If you (Ars Technica) are going to post an article about Apple's stock price the least you could do is provide some analysis, not a bunch of quotes from other news sources and those retarded "analysts".

I was wondering the other day how I might go about purchasing "sell" options for Apple shares for a few years down the track. I think the shares are going to go down over the foreseeable future, and wouldn't mind an opportunity to profit from someone else's misfortune.

Wall Street and the media manipulating the market in order to make money off the ignorant and ill advised? Nothing to do with the company ... Your could change the name to anyone and the product names accordingly and it could be any tech company right now.

26 percent year-over-year growth for iPads"It’s not that they fell short of the guidance..."... market share among tablets... just above 50 percent.... demand for the mini continues to be very strong...(Never mind the gazillion iPhones sold this year.)

If this was any other company it would be a great performance. But for Apple, "meh," investors were disappointed. Sucks to be Apple.

The real truth is people are starting to see through this whole "be different" ideology Apple has been trying to sell for years, the iPad isn't the only tablet out there and the iPhone has and will continue to lose market share in the mobile world. I think its starting to come down to the fact that if the economy does get worse, highly expensive tech toys (namely crApple products) will be one of the first things people stop buying, I'm not in any camp by the way just firmly NOT in Apples.

Apple is 100% dependent on mobile device sales... With the world economy still in the dumps as obvious by Japan and the EU I am confused as to why people would be surprised by a stock price drop. Add this to the wrench Google has recently thrown into the gears by offering the nexus devices sans contract for $300-349 this is a big deal, this pricing undercuts not only Apple but wireless providers. It intrigues me how carriers and Apple will react in the short term/long term to the devaluation of mobile devices.

Apple has paid one dividend in 17 years. What's up with that? If I invest in a company I want them working for me, quarter in, quarter out. Not $2.65 every 17 years. I make more money off my shipping line stocks every year.

I was wondering the other day how I might go about purchasing "sell" options for Apple shares for a few years down the track. I think the shares are going to go down over the foreseeable future, and wouldn't mind an opportunity to profit from someone else's misfortune.

Anyone know how to get an options broker?

You're really asking advice how to buy a Put option? You don't need an "options broker". Just open an Etrade account and go to town. It's not exactly a complicated transaction. Please, feel free to sink your money on Puts on Apple long term and come back and tell us how that went for you.

I never liked Jobs, but to give credit where credit is due... he was the one who changed the market with the iPod/phone/pad as well as Air.

Thing is though, this wasn't revolutionary. It never -was-. What Steve Jobs was good at was ADVERTISING. That is what Apple has been for a long time. All of this technology was coming down the line and, in many cases, had already been here for years - tablet laptops have been around since the 1990s. What Steve Jobs did was tell people "You want this!" And people did.

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I enjoyed your comment. Reminds me of the "nobody needs an Apple phone" headlines from 2006, or the "nobody needs a big iPod touch" headlines from 2010 or even the "Apple retail will fail" headlines.

The problem is, nobody DOES need a big iPod touch. Tablets are useful for a very limited range of things; most people are much better off with laptops or similar devices. They're a gimmick.

Smart phones are not, and are very useful for people who spend a lot of time away from computers but need to access email/ect. all the time. The iPhone was just a natural evolution of the line, and everyone was working on making one at the same time it came out.

However, the idea that Saint Jobs is responsible for this... well, its worth remembering that he wasn't always that successful, and he didn't die that long ago. These products were being devised when he was still in power.

The company is taking a dive for a simple reason: It won the early market, but it doesn't have the staying power. It drove a huge surge in smartphone adoption, but other makers came out with equally (or more) useful phones for lower prices. It won the early broken laptop market, but then other people jumped in on it and they don't overprice their stuff and provide the same or better product.

Even if Steve Jobs was still at the helm, this still would have happened.

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And the Nasdaq as a whole is down, too. As you note, this is an amateur mistake in the market, looking at one stock without looking at the market as a whole.

Ehhhhhhh...

The problem is that the other argument could be made, that we were riding a bubble and people were hyping the tech industry again, and now reality is setting in. Amazon, Microsoft, and Google have seen the smallest declines, were the least hyped, and are the least affected; HP has been having huge problems independent of anything else, Facebook was a mess from the get-go.

This isn't to say that the decline isn't across the board, but citing Facebook and HP in with the rest is wrong, because they have other things going on. Of course, one could argue the same is true of Apple.

The stock was substantially lower during the day. Basically once you no longer look invincable, the big mo is gone. The odd-lotters bolt.

What's next? Apple TV? It isn't like the market needs another streamer box. Well I suppose they can make the iphone thin enough to shave with. Then go super-retina where you need a microscope to see the dots. Wait, these ideas are so silly even fanbois won't drink that koolaid!

I enjoyed your comment. Reminds me of the "nobody needs an Apple phone" headlines from 2006, or the "nobody needs a big iPod touch" headlines from 2010 or even the "Apple retail will fail" headlines. Personally, I think it's too early to worry. Contrary to popular belief, Apple has never entered a new market every quarter. In fact, there was a six year gap between the iPod and iPhone. Apple has plenty of time to flesh out their iOS product line while they carefully contemplate their next move.

There wasn't much negativity when the Apple stores started up. Nor was the iphone welcomed with much negativity. In fact, all the phone vendors dreaded Apple entering the market. I think you are doing a bit of revisionist history.(For the record, I think the Apple store is a good idea. Your average electronics store is staffed by uh less that competent employees. )

Now the ipad was met with mixed reviews, but not universally panned.

Note the ipad mini is clear evidence that Apple has become a reactionary company. They are trying to stop their market erosion. But the mini is such a fail. Truly fanboi stuff.